PersonalFinance: Card tricks for managing credit

WASHINGTON (Reuters) - You're not the only one whose credit cards seem to be getting worse; it's happening to everybody. For those who find solace in that, the Federal Reserve Board has delivered it with a new survey of bank lending practices.

The Fed found the vast majority of banks increasing interest rates on credit cards, even on good-credit customers. Issuers are cutting borrowing limits for many customers and raising the credit scores they'll require before approving new card applications. They're adding annual fees to rewards cards and hiking the costs of cash advances and balance transfers. And those great zero percent deals? Dead, dead, dead.

Much of this is happening as bankers position their cards for the tougher new regulations that take effect next summer. By the time those rules kick in, cardholders will have had to swallow most of these new policies and practices. Who knows what will be left to regulate?

You don't have to wait until then to fight back. Here's how to take back control of your cards now.

-- Don't pay annual fees. "It's ridiculous to pay an annual fee right now," says Bill Hardekopf of Lowcards.com. "There are hundreds and hundreds of cards without an annual fee out there." Roughly only about 20 percent of card programs carry fees, with many of them being for top-tier rewards programs.

If you have a run-of-the-mill card that gives you points back for purchases, you shouldn't have to pay a fee for that.

-- Don't carry balances. It may take months, maybe more than a year, to pay off current balances if you've gotten behind on your debts. But if you are carrying a credit card balance from month to month, you lose any leverage you might have with the issuer. It's no longer easy or inexpensive to transfer balances to a cheaper card. Redouble your efforts to get your balances to zero as soon as possible. Once you do that, you'll have more power to pick and choose among card programs that are most convenient or money-saving for you.

-- Be very careful about balance transfers. A couple of years ago, you could transfer large balances to new card accounts that promised zero percent interest for a year. If they did charge a balance transfer fee, it was typically capped at $60 or $75. That's over. Now, those zero percent offers tend to last only six months or so, and they come with uncapped fees that can run as high as 5 percent of the total amount transferred. There's nothing great about an offer like that -- paying 4 percent or 5 percent upfront translates to an annual interest rate that could be incalculably high.

-- Call early and call often. If your card program changes in a way you don't like, your first step should be to call customer service. Complain politely, and specifically ask to have the problematic new policy reversed. Don't take no for an answer, at least at first. Ask to speak to a supervisor and continue to make your request.

-- Cancel the card. Do this if the card carries an annual fee you don't want to pay, and you have enough other cards to cover your borrowing needs. Don't do this if you are within six months of applying for a mortgage. That's because your credit score can take a hit if you cancel a card you have had for a long time, or one that has a large unused line of credit on it.

-- Keep the card, but don't use it. This strategy works for cards that have raised interest rates to objectionable levels. Keep the account open and active by using it a little bit every month and paying off the balance in full. Hardekopf recommends one fast food lunch a month, for example. Using the card infrequently like this could be enough to keep the card company from cutting your credit limit or closing the card altogether. Keeping the card account open protects your credit score, too.

-- Always comparison shop. It's less useful than it used to be to carry a wallet full of cards, but it is still a very competitive industry, so be on the lookout for plastic that's better than what you have. In addition to lowcards.com, you can research at cardratings.com, creditcards.com, cardtrak.com, and indexcreditcards.com to find the latest deals and programs. If you've got zero balances and a good credit score, you could still benefit from using a variety of rewards cards for different types of purchases. And that way, if one rewards card levies an annual fee, you can cancel it and start to use another.

(editing by Gunna Dickson)